Professional Documents
Culture Documents
AE = Accrued expenses
PE = Prepaid expenses
AR = Accrued revenue
UR = Unearned revenue
Answers:
UR a.) Atlas Magazine was previously prepaid $400,000 by subscribers and has
UR b.) Hornsby Company agreed to provide 1,000 units of its product to Micha
AE c.) Nancy and Sons owes its employees $30,000 for work done over the pa
AE d.) Replay Inc. advertised on TV 44 during the month of April, but has not y
PE e.) Centurion Company paid Reliable Insurance Company $54,000 for insur
UR f.) Reliable Insurance Company received a payment of $54,000 for insuranc
2.) Determine if the following transactions for Marlin Corporation require an adjustmen
4.) Leon Jackson is ecstatic! First National Bank just approved a loan for Leon to start a
designing sites. During June, his first month of business, the following occur:
a.) Webworks signs a note at the bank and is given $10,000 cash.
b.) Leon deposits $2,000 of his own money into Webworks' checking accou
c.) Webworks purchases a new computer and additional equipment for $3,
d.) Webworks purchases supplies worth $200 on account that should last W
e.) Webworks hires Nancy Po to assist with administrative tasks. She will c
her assistance.
f.) Webworks begins working on his first two websites, one Juan Sanchez, a
Pauline Smith, a local businesswoman.
g.) Webworks completes the site for Mr. Sanchez and sends him a bill for $
h.) Webworks completes the site for Ms. Smith and sends her a bill for $45
j.) Webworks pays Nancy $100 for her work on Mr. Sanchez' Web site.
k.) Webworks receives $500 in advance to work on a Website for a local res
m.) Webworks owes Nancy $100 for her work on Ms. Smith's Web site.
n.) Leon's parents let him know that Webworks owes $80 toward
o.) Webworks only used half of the supplies purchased in (d) above.
5.) Jan Haley owns and operates Haley's Dry Cleaners. The following occurred during D
a.) On Dec. 1, Haley prepaid rent on her store for December and January w
f.) Haley paid a salary to her assistant of $1,000 in cash for work done in th
Insurance 2000
Prepaid Insurance 2000
supplies e 2000
supplies 2000
6.) On January 1, Kevin Reynolds, a student at State U, decides to start a business. Kevi
need for mass produced copies of programs on CD's. While a lot of students have a
of CD's is needed.
account receivable 80
sales revenue 80
g.) KKCDK pays $100 on its accounts payable.
accounts payable 100
cash 100
h.) KKCDK receives $40 in advance to copy 50 CDs for a student group. He w
unearned revenue 40
cash 40
i.) KKCDK incurs $40 in tax expense. The taxes will be paid in February.
tax expense 40
accounts payable 40
j.) Kevin’s roommate, Mark, helps with the CD copying and delivering. KKCD
salary expense 50
salary payable 50
k.) KKCDK incurs $10 in interest expense. The interest will be paid with the
cash 10
note payable 10
i.) Prepare journal entries for the above events if needed. ("a." th
ii.) Prepare an unadjusted trial balance for KKCDK for January.
iii.) Prepare adjusting entries for the following. ("j" and "k")
accounts rec 40
sales rev 40
q.) KKCDK comples and delivers the advanced order of 50 CD's described in
account rec 40
sales rev 40
s.) KKCDK incurs $80 in tax expense. The taxes will be paid in March.
tax expense 80
accounts payable 80
t.) Mark continues to earn his salary of $50 and will be paid on March 1.
salart expense 50
salary payable 50
u.) The advertisement in "l." has now been used so an adjustment needs to
advertisment expense 40
accounts payable 40
v.) KKCDK incurs $10 in interest expense. The interest will be paid with the
notes payable 20
cash 20
i.) Prepare journal entries for the above events if needed. ("l." thr
ii.) Prepare an unadjusted trial balance for KKCDK for February.
iii.) Prepare adjusting entries for the following. ("t" and "v")
by subscribers and has delivered half of the magazines ordered.
f its product to Michaels Inc. and has substantially completed the agreement.
ork done over the past two weeks.
of April, but has not yet made an entry to record the event.
any $54,000 for insurance for twelve months, six of which have passed.
f $54,000 for insurance for twelve months from Centurion Company and six months have passed
require an adjustment or not. If an adjusting entry is required, give the correct entry.
a.) At the bexginning of the month, Marline agreed to perform services for the next three mont
$90,000 in advance. One month has now passed.
Adjustment is required. It is needed to reduce Unearned Revenue and in crease revenue by 1/3
b.) Marlin pays its employees every two weeks. At the end of the month, Marlin owes its emplo
Adjustment required. Marlin should increase Salaries expense and increased Salaries payable.
c.) Marlin paid $300,000 for rent at the beginning of the month by debiting prepaid rent and cr
but only one month has passed.
Adjustment required. Marlin must decrease prepaid rent and increase rent expense by one mo
d.) At the beginning of the month, Marlin agreed to perform services for Ryland Company for $
yet paid any cash to Marlin and the work is not substantially complete.
No adjustment needed.
r $10,000 per month. On September 1, 20XX, Keating pays Starling $60,000 for six months wort
a.) Record the entry that Keating Inc would make on September 1 when they pay Starling.
Prepaid rent incre 60,000
cash decreases 60,000
b.) Record the entry that Starling Enterprises would make on September 1 when they receive th
Cash Increases 60,000
Unearned revenue 60,000
c.) Record the adjusting entry that Keating would make on December 31, 20XX, as the company
Pre Paid Rent Dec 20,000
Rent Expanses Increase 40,000
d.) Record the adjusting entry that Starling would make on December 31, 20XX, as the compan
Unearned Revenue 20,000
Rent Revenue increases 40,000
an for Leon to start a Web site design and maintenance business called Webworks. He is now re
wing occur:
0,000 cash.
s, one Juan Sanchez, a friend of his dad's and the other for
orks owes $80 toward the electricity bill. Webworks will pay them in July.
d in (d) above.
nt of $2,400.
, income statement, statement of retained earnings and statement of cashflow for December 31
start a business. Kevin has noticed that various student organizations around campus are havin
ot of students have a CD drive on their computers that can write to CD's, it is a slow process whe
ment, he can provide a valuable product to the college community. So on 1/1, Kevin officially beg
rs have full ownership rights to the material on their CD's.
plicator (a piece of equipment), which can copy 7 CD's at one time. The cost is $1,300 and he pa
on campus. KKCDK sells 400 CDs to various groups for $0.80 per CD. KKCDK receives cash paym
r 100 CD's.
a student group. He will not begin work on the project until February.
paid in February.
g and delivering. KKCDK pays Mark a salary of $50 per month. Mark will get his first check on Fe
he first day of the month, KKCDK pays $20 in advance for advertising in the local paper. The adve
d in January.
ch. KKCDK receives cash for 450 of them and is owed for the remaining 50.
paid in March.
e paid on March 1.
orrect entry.
or the next three months for Catsui Corp. for $30,000 per month. Catsui paid Marlin
Marlin owes its employees $480,000, but will not pay them until the following week.
sed Salaries payable.
ng prepaid rent and crediting cash. The $300,000 covered six months of occupancy,
nt expense by one month's worth of he amount paid, or 50,000 (300000/6 months= 50,000 per
Ryland Company for $16,000 per month for the next six months. Ryland has not
00 for six months worth of rent.
ebworks. He is now ready to purchase his needed equipment, hire his administrative help, and b
$3,000
Supplies $500
D. 200 O. 100
Note Payable
$100 A. 10,000
Equipment $10,000
C. 3,000
$3,000
$3,250
Cash
500 1300
1000 100
240
40
20
10
Accounts Payable
100 150
40
$90
Unearned Revenue
DK receives cash payment for 300 40
$40
Cash
500 1300
1000 100
et his first check on Feb. 1st. 240 10
40 20
20
80
$360
40
Accounts Payable
100 150
40
90-90=0
e local paper. The advertisements will run 135
80
Unearned Revenue
40
$40
d Marlin
ing week.
cupancy,
Retained Earnings
0
Sales Revenue
G. 600
H. 450
$1,050
Salaries Expense
J. 100
$100
Tax Expense
L. 200
$200
Webworks
Adjusted Trial Balance
30-Jun
Debits Credits
$9,800
s Receivable 450
100
3,000
s Payable $280
Payable 100
ed Revenue 500
10,000
2,000
d Earnings, 6/1 0
1,050
Goods Sold
Expense 200
200
Expense 80
s Expense 100
$13,930 $13,930
$2,000 $80
0 $100
Sales Revenue
G. 600
H. 450
$1,050
Salaries Expense
J. 100
M. 100
$200
Tax Expense
L. 200
$200
Prepaid Rent Prepaid Insurance Supplies
0 0
A. 2,000 B. 2,400 E. 2,400
$4,000 $3,000
$750
$80 $1,300
Salaries Payable Note Payable Capital Stock
50 1,000
10
50 $1,010 $500
$2,300
Rent Expense
0
J. 1,000
$1,000
$3,250
Debits Credits
$360
80
1,300
20
150
$90
1,010
50
500
40
320
50
$40
2000 20000
Debits Credits
$850
0
1,300
20
285
$215
20
50
500
0
720
100
$80
2635
2150 2150
paid Insurance Supplies Haley's Dry Cleaners
K. 400 M. 2,000 Adjusted Trial Balance
E. 2,400 31-Dec
Assets:
Current:
Cash $3,250
Accounts Receivable 8,200
Prepaid Rent 1,000
Prepaid Insurance 2,000
Supplies 400
Total Current Assets $14,850
Liabilities:
Current:
Accounts Payable $2,700
Salaries Payable 1,000
Toal Current Liabilities $3,700
Noncurrent:
Notes Payable $ 4,000
Total Liabilities $7,700
Stockholders' Equity:
Capital Stock $3,000
Retained Earnings 4,150
Total Stockholders' Equity 7,150
Total Assets $14,850